Chicago | Reuters — Chicago Mercantile Exchange lean hogs on Wednesday climbed to their highest level in almost six months, fuelled by short-covering following strong cash and wholesale pork prices, said traders.
Technical buying developed after February and March futures surpassed their respective 10-day moving averages of 65.662 and 69.023 cents (all figures US$).
February hogs ended 2.3 cents/lb. higher at 67.525 cents, and April closed 2.525 cents higher at 70.15 cents.
Wednesday morning’s slaughter-ready, or cash, hog price in Iowa/Minnesota averaged $63.69/cwt, 56 cents higher than on Tuesday, the U.S. Department of Agriculture said.
Separate USDA data on Wednesday morning showed the average wholesale pork price jumped $1.09/cwt to $82.53 from Tuesday, with price increases for all categories listed except loins.
Algorithm traders increased their long-side expose in the hog market in the belief that robust pork demand will offset increased production, said Linn Group analyst John Ginzel.
Traders and analysts said heavy snow in parts of the western Corn Belt impeded the flow of hogs to packing plants which, along with profitable processor profits, helped underpinned cash prices.
Hog futures garnered more support from Tuesday’s U.S. government cold storage report. It showed decreased December total pork stocks, and record-low belly inventories for the month.
Modest live cattle gains
CME live cattle futures rose modestly, aided by initial cash price firmness, said traders.
February live cattle closed up 0.2 cent/lb. to 119.875 cents, and above the 10-day moving average of 119.605 cents. April finished 0.275 cent higher at 118.675 cents.
Animals at Wednesday morning’s Fed Cattle Exchange, on average, sold at $122/cwt versus last week’s $120.50 average.
Packer bids for other cattle in the southern U.S. Plains were at $120/cwt against $124-$125 asking prices, said feedlot sources.
Some processors in the upper Plains are short on inventory in the midst of a winter storm. But, others are grappling with their poor margins and more animals for sale than last week, said traders and analysts.
CME feeder cattle closed weaker on firmer corn prices and softer back-month live cattle futures.
January feeders, which will expire on Thursday, ended down 0.05 cent/lb. to 132.375 cents. Most actively-traded March closed 0.325 cent lower at 129.85 cents.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.